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Assume the average borrowing rate for Australian companies is 6%, the average tax rate is 30%, and the average P/E ratio is 15x. Referencing the
Assume the average borrowing rate for Australian companies is 6%, the average tax rate is 30%, and the average P/E ratio is 15x. Referencing the cost of capital, explain why on average, on an after-tax basis, debt financed cash offers are more likely to be accretive to the bidder than stock offers.
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